November 18, 2016

Apple is reportedly asking its manufacturing partners to investigate moving iPhone production to the United States, according to the Japanese newspaper The Nikkei. According to the report, sources claim that Apple has approached Foxconn and Pegatron, the two manufacturing companies that are largely responsible for assembling iPhones. Foxconn is apparently exploring the possibility, while Pegatron has elected to decline due to cost concerns.

According to The Nikkei, Apple made the request to explore moving manufacturing to its partners in June, prior to President-elect Donald Trump’s victory in the recent election. But despite that, this report has to be considered in light of Trump’s comments regarding Apple earlier this year. […]

Moving iPhone production overseas would likely be a pricey endeavor, with The Nikkei sources claiming that it would increase production costs by nearly 50 percent, which makes sense given that the vast majority of Apple’s part suppliers are already located in Asia.

This does not seem like a move Apple will move beyond the exploratory phase. Steve Jobs had reportedly told President Obama that “those jobs are never coming back.” when asked about manufacturing Apple Products in the USA. Apple has repeatedly said that part of the difficulty is training. There simply isn’t enough people technically trained in the skills that an iPhone factory would need. While that may be the case, the other issue, as raised by The Verge, is economics.

Most of the components for the iPhone are also manufactured overseas. Moving the manufacturing to the US would require a huge supply chain shift and would inevitably raise the price of the iPhone by a non-negligable amount. This would be especially difficult to hide from consumers now that the phone buying model has moved from the two-year contract, subsidy model, which hid the total cost of the device, to the payment plans and full cost purchase popular today.

Given that it’s recent price hike for the MacBook Pros hasn’t gone over without raising some eyebrows, I don’t see Apple wanting to raise prices on it’s most popular product if it can avoid it. It’s good to see Apple exploring their options. However, without a law from a Trump administration forcing their hand, I think manufacturing of Apple devices will stay in China, at least for the foreseeable future.